Are you in your 50s, have your attention being pulled towards the property market for the first time, but you’re standing back, wondering, is it still a viable time to invest?
Michael Beresford, director of investment services at OpenCorp, reminds people that “there’s a lot of living left to be done from age 70 onwards”.
“In that same period of time, the last 20 years, prices in Sydney have gone from $300k to more like a million dollars, and [there was] exponential growth in Melbourne from $250k up to well over $800k,” Beresford explains.
For investors who are prepared to take the action that’s available to them today and are persistent to find appropriate solutions for a medium to long-term timeframe, Beresford says that it will be “very hard to go wrong because property is a proven asset class”.
“What the immigration policy is telling us is that the Government has a commitment to scale migration. People need to live somewhere and the two main drivers that determine where people choose to live are jobs and affordability,” Beresford says.
But while demand is expected to incline, there’s the reluctancy for certain age-groups to take on more debt, especially if they are close to finalising the loan on their primary place of residence or are about to welcome their retirement years.
“A very small percentage of Australians historically have invested. It’s about 10%. It is growing bit by bit as people become more aware of wanting a better lifestyle than the pension and so forth,” Beresford says.
He also explains that while your home requires repayments out of your own pocket, with investment property, you are receiving rental income and tax benefits, which “help you recover that debt”.
“Because of where interest rates are today, if you’ve got a solid deposit and you’re maximising your tax benefits, it won’t cost you anything out of pocket to be able to hold the property,” he shares.
The low interest rate climate has also opened up further investing opportunities that would otherwise be off the table for a handful of investors; such as having better financial capacity to add value through a development or a sub-division. However, Beresford advises people to remain level-headed about the project they are wanting to execute.
“[Low interest rates] creates more opportunities, but if you’ve never done a development, don’t stick your neck out and go do a 10-unit development as your first project because the risk is high if you’re doing it yourself and you’re not familiar with the process,” Beresford says.
He explains that one of the biggest advantages at the moment is that “your investment property can give you a much better return just on the cash flow beating what the interest rates would be on deposits by two or three-fold”.
“So the growth is effectively for free,” he says.
